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Proposal for e-commerce sales tax in US

  • Feb 3, 2013 | Richard Asquith

Proposal for e-commerce sales tax in US

Currently, retailers must have a physical presence, ‘nexus’, in a US state before it is liable to register for and charge State Sales Tax. This can give out-of-State internet retailers a key cost advantage since they can sell to in-State consumers without tax charges.

US Sales Tax on e-commerce

There have been a number of attempts and proposals to introduce a non-resident e-commerce sales tax in the US, mirroring the EU online VAT regime. Such schemes, often known as an ‘Amazon Tax’ has failed to receive much support. However, with the US ecommerce market now worth over USD 11 billion per annum, it is coming into focus as a potential new source of sales tax revenues.

In the latest attempt to impose such a tax across all States, there is a new proposal for inclusion in the National Defense Authorization Act. It has been proposed by both Democratic and Republican Senators for implementation in 2013. If successful, it will overturn the 1992 ruling by the Supreme Court that required tax residency to be established before any sales tax could be charged.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.